U.S. Justice Department challenges Anheuser-Busch's $20.1 billion acquisition of Modelo < br />

2013-02-01 08:13:25 GMT+7 (ICT)

WASHINGTON (BNO NEWS) -- The Department of Justice (DoJ) on Monday challenged Anheuser-Busch InBev's (ABI) proposed acquisition of total ownership and control of Grupo Modelo in order to maintain competition in the nation's beer industry.

The DoJ filed a civil antitrust lawsuit, arguing that the $20.1 billion transaction would substantially lessen competition in the market for beer in the whole country and in 26 metropolitan areas across the United States. The situation would result in consumers paying more for beer and having fewer new products from which to choose, it said in a statement.

Last year, American consumers spent at least $80 billion on beer with ABI's Bud Light as the best selling beer in the nation and Modelo's Corona Extra as the best-selling import. 

In addition, the DoJ explained that even a small increase in the price of beer could result in billions of dollars of harm to American consumers due to the size of the beer market in the United States.

Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division, said that the lawsuit is looking to stop the merger to benefit competition and the American consumer.

"If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers," he said, adding that the merger would eliminate Modelo as an important competitive force in the beer industry.   

The department's lawsuit was filed in the U.S. District Court for the District of Columbia and seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.

ABI and Modelo–the largest and third largest beer firms, respectively–together control about 46 percent of annual sales in the United States.  MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales. 

Belgium's Anheuser-Busch InBev, which is based in Leuven, agreed to acquire Mexico's Grupo Modelo, the parent company of Corona beer in July 2012. In 2011, ABI had revenues of approximately $39 billion, while Modelo had revenues of approximately $7 billion.

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Last year, American consumers spent at least $80 billion on beer with ABI's Bud Light as the best selling beer in the nation and Modelo's Corona Extra as the best-selling import.

"Bud Light" and "beer" in the same sentence. Heh Heh.